Between them, Gary Dean Longnecker and his wife, Sue Ann, made five trips to federal bankruptcy court. Those efforts were enough to preserve their title to an $800,000 home in Johnston, the Iowa Court of Appeals ruled today.
This is a case where the Longneckers claimed they were the victims of malicious prosecution by lenders who sought to foreclose on the home, beginning in 2007. Attorneys for the lenders, on the other hand, claimed the Longneckers were playing the system.
Appeals Court judges held that the intent of the Longneckers didn't matter. What does hold sway is the deference state court actions have to bankruptcy filings, where a personal residence is a castle protected by a moat of legal precedents. 
In 2007, Wells Fargo & Co. received a foreclosure judgment on a $681,000 mortgage. Gary Longnecker filed to liquidate assets under Chapter 7 of federal bankruptcy law in February 2008, three weeks before the home was to be auctioned at sheriff's sale. The filing resulted in the cancellation of the sale.
Wells Fargo sought relief from the automatic stay that resulted from the bankruptcy filing, which a bankruptcy court granted. The home was rescheduled for sheriff's sale on Dec. 30, 2008.
Gary Longnecker filed to reorganize his finances under Chapter 13 of federal bankruptcy law 30 minutes before the sale was to begin. The handwritten petition temporarily halted the sale.
Wells Fargo assigned the mortgage to Deutsche Bank, which canceled the sheriff's sale. On Valentine's Day 2009, a judge dismissed the Chapter 13 case on a motion by the trustee in the case.
A month later, Deutsche Bank received a court order for a third sheriff's sale. Less than an hour before that sale was scheduled to start, Gary Longnecker filed another Chapter 13 petition. The bank canceled the auction, and Longnecker moved to have his bankruptcy case dismissed.
Six days before the statute of limitations was to expire on the original foreclosure judgment, Deutsche Bank was granted a fourth special execution, and a sheriff's sale was set for Jan. 7, 2010. Deutsche Bank canceled the sale, claiming that there was a potential for a "short sale" with the Longneckers.
Those negotiations fell apart, and Deutsche Bank filed for fifth and sixth sheriff's sales. Both were canceled after Sue Ann Longnecker filed bankruptcy petitions.
On May 20, 2011, Deutsche Bank purchased the Longneckers' property at a rescheduled sheriff's sale, and the sheriff filed the return of special execution satisfied. However, the case wasn't over.
Later that year, the Longneckers attempted to reclaim title to their home, claiming that Deutsche Bank had strayed outside the statute of limitations that started with Wells Fargo's 2007 foreclosure.
Polk County Judge Robert Hanson agreed, ruling that each bankruptcy filing pre-empted actions in state court to obtain the property, and that Deutsche Bank had not obtained the property inside the timeline that was established in 2007.
"While the Longneckers' actions of filing multiple bankruptcies and attempts to negotiate may have delayed the pending sheriff's sales, it was Deutsche Bank's cancellation of the sheriff's sale scheduled after the fourth execution which ultimately foreclosed its ability to execute on its judgment," according to the court ruling, which was upheld by the Iowa Court of Appeals. Click here to read the ruling.